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During the lecture video, while coming to IAS 37 Provisions, the tutor has told that dismantling cost if present in a certain case, it has to be discounted and brought to PV and provision is created.
While studying Financial Reporting text a year back, that dismantling cost is brought to PV, added and recognised to the initial cost of the asset. That value of dismantling costs is depreciated every year and so is dismantling cost recognised on every year financial statements.
The increase in liability each year is too taken to Finance cost each year.What the tutor has said in lecture of recognition of provision of dismantling cost, wouldn’t this create a scenario of recognition twice ??
Please help me with the concerts regarding this.
What you say below is perfect:
“While studying Financial Reporting text a year back, that dismantling cost is brought to PV, added and recognised to the initial cost of the asset. That value of dismantling costs is depreciated every year and so is dismantling cost recognised on every year financial statements.
The increase in liability each year is too taken to Finance cost each year.’The provision is first set up when the asset is built because that is when damage is done to the landscape. There is definitely no further provision!
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